Backdrop of price slump of gold and silver becomes visible with a delay

via Commerzbank

The gold price is continuing the recovery it has been making over the past few days and is trading at just short of $1,480 per troy ounce as the new week begins. In euro terms the yellow precious metal has climbed to around €1,130 per troy ounce. As we had anticipated, the CFTC statistics are now showing, with some delay, that the slump in the price of gold two weeks ago was driven predominantly by the futures market. In the week to 23 April, net long positions held by money managers (known as “managed money”) were reduced by 15.7 thousand to 52.9 thousand contracts. The reduction in positions among “non-reportables” (those market participants who are not required to report their holdings) was considerably more pronounced. These players, most of them retail investors, cut their net long positions between 9 and 23 April by a good 24 thousand to just 133 contracts, putting them at their lowest level in 12 years. From their record high of nearly 61 thousand contracts in early October 2012, positions have thus been almost entirely eliminated within just seven months. The picture is much the same for silver: whereas money managers had only slightly reduced their net long positions recently, non-reportables had slashed their positions to 2,163 contracts, bringing them to their lowest level since 2001. Given their delayed character, positions may also have been reduced even further after the reporting date, despite the fact that prices have recovered significantly in the meantime.